1

SRI
POO
RNA
PRAJ
NA
NAME OF THE AGENCY: SMS FINANCIAL SERVICES

EVE
NAME OF THE TRAINEE: SUMANTH N JOSHI

NIG
UUCMS ID: U05PE21C0011

COL
TITLE OF THE PROJECT: LOAN ACQUISITION PROCEDURES AND
DOCUMENTATION: A COMPREHENSIVE ANALYSIS
NAME OF FACULTY SUPERVISOR: Mr. RAGHAVENDRA AITAL
LEG
NAME OF PROPRIETOR: Mr. SUDHISH NAYAK

AGENCY ADDRESS: SMS FINANCIAL SERVICES

NO.10, 3rdFLOOR MYTHRI COMPLEX,
UDUPI -576101
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DECLARETION
I hereby declare that “loan acquisition procedures and documentation: a comprehensive
analysis at SMS Financial services” is the result of the project work carried out by me.
for the fulfilment of bachelor’s Degree in Bachelor of commerce by Mangalore University.
I also declare that this project is the outcome of my own efforts and that it has not been
submitted to any other university or Institute for the award of any other degree Certificate.

PLACE: Udupi NAME: Sumanth joshi

DATE:12-03-2024 UUCMS ID: U05PE21C0011
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ACKNOWLEDGEMENT

I want to take this moment to express my sincere of gratitude to Mrs. Sukanya marry J,
Principal of Poorna Prajna evening college Udupi, for giving me this opportunity to execute
the project work
I sincerely express my profound gratitude to Mr. Vinayak pai vice principal of Poorna
Prajna evening college Udupi, for extending greater support and assistance to complete
internship project.
I convey my sincere gratitude and special note of thanks to Mr. Nagraj Achar Head of the
department. for his unwavering guidance and invaluable feedback and assistance provided
during every stage of project. I would like to express my gratitude to my parents for their
unwavering blessings and constant support, without which this project would not have come
to fruition.
And I also extend my wholehearted thanks to Mr. Sudhish Nayak, Proprietor of SMS
financial services, for providing comprehensive learning atmosphere and directing me to
successful completion of this project report.

. Finally, I convey my sincere regards and thankfulness to all those, who supported my
internship journey.

PLACE: Udupi NAME: Sumanth joshi

DATE:12-03-2024

Sl.NO CONTETNTS PAGE NO

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1 INTRODUCTION AND FINANCIAL 5-7

SECTOR PROFILE
1.1 The concept of Loan, 5
1.2 insurance 5
1.3 Chit funds 6
1.4 CIBIL score 7
2 FUNDAMENTALS OF AGENCY 8-12

2.1 History of agency 8

2.1 Agency profile 9
2.2 Vision and motive 11
2.3 Available Services 12
3 DATA ANALYSIS AND 15-26
INTERPRETATION
3.1 Documentation 15
3.2 Analysis 25
4 SUMMARY OF FINDINGS, CONCLUSION AND 27-28
RECOMENDATION
4.1 Suggestions 27
4.2 Conclusion 28
TABLE OF CONTETNTS
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INTRODUCTION
The Concept of loan
A loan is a sum of money that is borrowed from a lender with the agreement to pay it back,
typically with interest, within a specified period of time. Loans can be used for various
purposes, such as purchasing a home, financing education, starting a business, or covering
unexpected expenses.
Loans provide individuals and businesses with access to capital, allowing them to invest in
projects, expand operations, and innovate. This investment stimulates economic growth by
creating jobs, increasing productivity, and driving innovation.
Loans enable consumers to make purchases they otherwise couldn't afford upfront, such as
homes, cars, or education. This stimulates demand for goods and services, driving economic
activity.
During economic downturns or financial crises, access to credit can help stabilize the
economy by providing individuals and businesses with the means to weather financial
hardships, maintain operations, and avoid bankruptcy.
Lenders earn interest income on the loans they provide, which contributes to their profits and
allows them to continue lending. This financial intermediation facilitates the flow of capital
within the economy.
However, excessive borrowing can lead to debt burdens for individuals and systemic risks for
the economy if not managed properly. Therefore, it's essential to strike a balance between
borrowing to support growth and ensuring sustainable debt levels.

Insurance
Insurance is a contract between an individual or an entity (the insured) and an insurance
company (the insurer), where the insured pays a premium in exchange for financial protection
or reimbursement against specified risks or losses. In the event of a covered loss or
occurrence, the insurer agrees to compensate the insured or beneficiaries according to the
terms outlined in the insurance policy. The purpose of insurance is to provide financial
security and mitigate the potential impact of unexpected events, such as accidents, illnesses,
natural disasters, or loss of property.
Insurance provides financial protection against unexpected events, such as accidents,
illnesses, property damage, or liability claims. In the event of a covered loss, the insurance
company compensates the policyholder, reducing the financial impact of the loss.

Knowing that you have insurance coverage can provide peace of mind, allowing you to focus
on other aspects of your life without worrying about the financial consequences of potential
risks.
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Insurance helps individuals and businesses manage risk by transferring the financial burden
of potential losses to the insurance company. This allows policyholders to protect their assets
and investments without having to bear the full financial risk themselves.
In many cases, insurance coverage is required by law. For example, auto insurance is
mandatory in most jurisdictions to legally operate a vehicle. Having the necessary insurance
coverage ensures compliance with legal requirements and helps avoid potential penalties or
legal issues.
Some types of insurance, such as health insurance, provide access to essential services,
including medical care, treatments, and medications. Without insurance, the cost of these
services may be prohibitively expensive for many individuals.

Overall, insurance offers valuable protection and support to policyholders, helping them
navigate life's uncertainties with greater confidence and security.

Chit funds
Chit funds are a type of savings and investment scheme commonly found in India and some
other countries. In a chit fund, a group of individuals comes together and contributes a fixed
amount of money at regular intervals (usually monthly). The total pool of contributions is
then disbursed to one member of the group through an auction or a lottery system, known as a
chit auction, each month.
Here's how a chit fund typically works:
Formation of the Group: A group of people, often friends, family members, or members of
a community, come together to form a chit fund group.
Monthly Contributions: Each member agrees to contribute a fixed amount of money to the
chit fund pool at regular intervals, usually monthly. The total contribution pool is determined
by multiplying the monthly contribution amount by the number of members in the group.
Chit Auction: Every month, one member of the group receives the total pool of
contributions, minus any administrative fees or deductions. The recipient is determined
through a chit auction, where members bid for the amount, they are willing to take at a
discount. The member who bids the lowest discount rate wins the auction and receives the
funds.
Rotation: After each auction, the cycle continues, and the next month's auction takes place
until every member has received their share of the contributions. The process continues until
all members have received their turn, typically over the course of the agreed-upon duration of
the chit fund.

Chit funds provide a means for members to access funds for various purposes, such as
financing business ventures, paying for education, purchasing property, or meeting other
financial needs. However, participation in chit funds carries risks, including the possibility of
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default by members, fraud, or mismanagement by the chit fund operator. Therefore,

individuals considering joining a chit fund should carefully evaluate the risks and ensure that
the chit fund is regulated and managed by a reputable entity.

CIBIL score
CIBIL score, also known as Credit Information Bureau (India) Limited score, is a numeric
representation of an individual's creditworthiness. It is a three-digit number ranging from 300
to 900, with higher scores indicating better creditworthiness.
CIBIL scores are calculated based on various factors such as a person's credit history,
repayment behaviour, types of credit accounts, outstanding debt, credit utilization ratio, and
the length of credit history, among others. Lenders, such as banks and financial institutions,
use CIBIL scores to assess the credit risk associated with a borrower before extending credit
in the form of loans or credit cards. A higher CIBIL score suggests a lower credit risk, making
it more likely for the individual to qualify for loans and credit cards with better terms
and interest rates
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History OF AGENCY
SMS (Shree Manjunatha Swamy) Financial Services started on September 2002 as an
individual entity. It is owned and managed by Mr. Sudhish Nayak. He is a sole proprietor. and
opened its first branch in Mythri complex 3rd floor near service bus stand Udupi. Presently
the agency rendering services to geographical area throughout Karnataka. The agency having
two branches at Shivamogga and Davangere including Udupi as a head office.
The agency working as a DSA (Direct Sales Associates) for major government and private
sector banks and some NBFC’s (Non-Banking Financial Company) for selling different type
of credit facility services and product as per their guidelines.
The clients of the business are business man, manufacturing unit, salaried
individuals and doctors.
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Agency profile

Agency Name SMS Financial services

Year of establishment 2002

Type of organisation Proprietorship

Employee strength 46

Address Mythri Complex ,3rd floor, Udupi

Proprietor Mr. Sudhish Nayak
Senior manager Mr. Raghavendra Aital
Operation manager Mrs. Savita
Clients Businessman, salaried individuals,
Doctors

SMS Financial Services is a pioneering financial institution situated in Udupi, renowned for
its commitment to providing comprehensive financial solutions tailored to meet the diverse
needs of its clientele. With a rich history spanning several years, SMS Financial Services has
emerged as a trusted partner for individuals, businesses, and organizations seeking expert
financial guidance and support in all over Karnataka.
riven by a mission to empower clients to achieve their financial goals, the agency offers a
wide range of services, including investment advisory, wealth management, insurance
solutions, and retirement planning. Whether clients are looking to grow their wealth,
safeguard their assets, or plan for a secure future, the institution's team of seasoned
professionals strives to deliver personalized strategies and innovative solutions designed to
optimize financial outcomes. A customer-centric approach is at the core of its operations. The
institution prides itself on fostering long-term relationships built on trust, integrity, and
transparency. By prioritizing the unique needs and objectives of each client, agency ensures
that every financial plan is customized to align with individual goals, risk tolerance, and time
horizon. Moreover, the agency distinguishes itself through its unwavering commitment to
excellence and innovation. Leveraging cutting-edge technology and industry best practices,
the institution continuously evolves to stay ahead of market trends and deliver superior value
to its clients.
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In essence, SMS Financial Services stands as a beacon of financial stability and prosperity in
Udupi, dedicated to empowering individuals and businesses alike to navigate the
complexities of the financial landscape with confidence and peace of mind.

VISION AND MOTIVE

The main motive of SMS Financial Services in Udupi is likely cantered around empowering
individuals, families, and businesses to achieve financial security, prosperity, and peace of
mind. Some of the key components of this overarching motive may include:
the agency likely dedicated to prioritizing the needs, goals, and interests of its clients above
all else. By adopting a client-centric approach, the institution aims to build long-lasting
relationships based on trust, integrity, and transparency. its likely strives to offer a diverse
range of financial products and services tailored to meet the unique needs and preferences of
its clientele. Whether clients seek investment advice, wealth management services, insurance
solutions, or retirement planning assistance, the institution aims to provide comprehensive
solutions to help them achieve their financial objectives.
Another key motive of the agency is may be to empower clients with the knowledge, skills,
and resources needed to make informed financial decisions. This could involve offering
expert guidance, educational seminars, and personalized consultations to help clients navigate
complex financial landscapes with confidence.
Ultimately, the main motive of the agency is likely to facilitate long-term financial success
and prosperity for its clients. Whether through prudent investment strategies, effective risk
management, or strategic financial planning, the institution aims to help clients build and
preserve wealth over time, ensuring a secure future for themselves and their families.
By adhering to these core principles and objectives, SMS Financial Services in karnataka
Endeavours to be a trusted partner and ally in its clients' financial journeys, providing the
support and guidance needed to turn their financial aspirations into reality.
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AVAILABLE SERVICES
 BUSINESS LOANS / PERSONAL LOANS/DOCTOR LOANS
 HOME LOANS (For construction/purchase/Renovation)
 LAND PURCHASE LOANS (For converted sites)
 MORTGAGE LOANS (Residential house)
 HOME LOAN TAKEOVER WITH TOP UP FECILITY
 NRI LOANS (For construction/Purchase/Renovation of house)
 COMMERCIAL VEHICLE LOANS(New/Used)
 CAR LOAN(New/Used)
 INSURANCE (Life, Vehicle, Health, Fire, Godown, Marine Insurance)
 OTHER SERVICES (PAN card, senior citizen card, solar services” SELCO”)
 CHIT FUND SERVICES (1Lakh-25 Lakh chit group)
 ONLINE POLICY ISSUING CENTRE (Agency Portal -united India)
 CONSOLIDATION OF LOANS
 CIBIL SOLUTIONS
 TOURISM (Domestic and International Tours)
 CSC (Ayushman/NPS/Govt. online services)
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SMS Financial Services in Udupi offers a diverse range of financial solutions to meet the
varying needs of its clients. Some of the key services provided by SMS Finance include:
Investment Advisory: it provides expert investment advice tailored to the financial
objectives, risk tolerance, and time horizon of its clients. This includes guidance on stocks,
bonds, mutual funds, exchange-traded funds (ETFs), and other investment vehicles.
Wealth Management: For high-net-worth individuals and families, SMS Finance offers
comprehensive wealth management services aimed at growing and preserving wealth over
the long term. This may involve portfolio management, asset allocation strategies, estate
planning, and tax optimization.
Insurance Solutions: the company assists clients in identifying and acquiring appropriate
insurance coverage to mitigate various risks, including life insurance, health insurance,
property and casualty insurance, and retirement income solutions.
Retirement Planning: Planning for retirement is a crucial aspect of financial management.
The agency helps clients develop personalized retirement plans, including strategies for
saving, investing, and generating income during retirement years.
Tax Planning: Minimizing tax liabilities is essential for maximizing returns on investments.
SMS Financial Services offers tax planning services to help clients optimize their tax
strategies and take advantage of available deductions, credits, and tax-efficient investment
vehicles.
Estate Planning: Estate planning is essential for ensuring the orderly transfer of assets to
beneficiaries and minimizing estate taxes. SMS Finance assists clients in developing estate
plans that align with their wishes and financial objectives, including wills, trusts, and other
estate planning tools.
Financial Education and Seminars: the agency conducts educational seminars and
workshops to empower clients with the knowledge and skills needed to make informed
financial decisions. These sessions cover topics such as budgeting, investing, retirement
planning, and risk management.
Debt Management: Managing debt effectively is crucial for achieving financial stability. the
agency guidance on debt consolidation, repayment strategies, and debt reduction techniques
to help clients alleviate financial burdens and achieve their goals.
By offering this comprehensive suite of services, SMS Financial Services aims to provide
holistic financial solutions that address the unique needs and goals of each client, ultimately
fostering long-term financial success and prosperity.
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DOCUMENTATION

Business loan
A business loan is a type of financing provided by a financial institution or lender to a
business entity for various purposes related to the operation, expansion, or improvement of
the business. These loans can be used for purposes such as starting a new business,
purchasing equipment or inventory, expanding operations, covering operational expenses, or
investing in marketing and advertising.
Here are some key concepts related to business loans:
Types of Business Loans: There are various types of business loans tailored to different
needs, including term loans, lines of credit, SBA loans (Small Business Administration
loans), equipment financing, merchant cash advances, and invoice financing.
Interest Rates: Business loans come with either fixed or variable interest rates. Fixed rates
remain constant throughout the loan term, while variable rates can fluctuate based on market
conditions. The interest rate depends on factors such as the borrower's creditworthiness, the
loan amount, and the term length.
Collateral: Some business loans require collateral, which is an asset or property pledged by
the borrower to secure the loan. Collateral provides security to the lender in case the borrower
defaults on the loan. Common types of collateral include real estate, equipment, inventory, or
accounts receivable.
Creditworthiness: Lenders assess the creditworthiness of the borrower before approving a
business loan. This evaluation considers factors such as the business's credit history, the
owner's personal credit score, financial statements, revenue projections, and business plan.
Loan Terms: Loan terms vary depending on the lender and the type of loan. They typically
include the loan amount, interest rate, repayment schedule, term length, and any fees
associated with the loan.
Repayment: Business loans are repaid over a specific period, which can range from months
to several years, depending on the loan amount and terms. Repayment may be made in fixed
Instalments or through flexible payments, depending on the agreement between the borrower
and the lender.
Application Process: Applying for a business loan involves submitting an application along
with relevant financial documents, such as business tax returns, bank statements, balance
sheets, and income statements. The lender evaluates the application and makes a decision
based on the borrower's creditworthiness and the business's financial health.
Impact on Cash Flow: Borrowing funds through a business loan affects the company's cash
flow. While the loan provides immediate access to capital, the repayment schedule must be
managed to ensure it doesn't strain the business's finances.
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Business loans can be valuable tools for businesses to finance growth opportunities, manage
cash flow fluctuations, or address short-term financing needs. However, it's essential for
borrowers to carefully consider the terms and implications of the loan before proceeding.

Documents required for Business Loan: -

 Photo 2 Copies
 Pan Card Copy
 Aadhar Card Copy (both side)
 Own House Proof (Latest Electricity Bill / Tax paid Receipt
 Trade License
 ITR-Latest two year
 1 Year Banking (CA/OD)
 Loan tracks from beginning to Till Date.
 GST Certificate
 GST return-one year
 OD Sanction letter

Personal loan
A personal loan is a type of loan extended to an individual borrower by a financial institution
or lender. Unlike business loans, which are specifically intended for business purposes,
personal loans are typically used for personal expenses or financial needs.
Here are some key concepts related to personal loans:
Purpose: Personal loans can be used for a variety of purposes, including debt consolidation,
home improvement, medical expenses, education costs, wedding expenses, vacations, or any
other personal expenses. Unlike some other types of loans, such as auto loans or mortgages,
personal loans are often unsecured, meaning they are not backed by collateral.
Unsecured vs. Secured: Personal loans can be either unsecured or secured. Unsecured
personal loans do not require collateral and are granted based on the borrower's
creditworthiness, income, and financial history. Secured personal loans, on the other hand,
are backed by collateral, such as a vehicle, savings account, or other assets. Secured loans
typically offer lower interest rates because they pose less risk to the lender.
Interest Rates: Personal loans come with either fixed or variable interest rates. Fixed-rate
loans have a consistent interest rate throughout the loan term, making it easier for borrowers
to budget their monthly payments. Variable-rate loans, on the other hand, have interest rates
that can fluctuate over time based on market conditions.
Loan Amount and Term: The loan amount and term length vary depending on the lender
and the borrower's financial situation. Personal loans may range from a few hundred dollars
to tens of thousands of dollars, with repayment terms typically ranging from one to seven
years. Longer loan terms result in lower monthly payments but may accrue more interest over
time.
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Creditworthiness: Lenders evaluate the borrower's creditworthiness before approving a

personal loan. This assessment considers factors such as the borrower's credit score, credit
history, income, employment status, debt-to-income ratio, and other financial obligations.
Borrowers with higher credit scores and stable incomes are more likely to qualify for lower
interest rates and higher loan amounts.
Application Process: Applying for a personal loan involves submitting an application to a
lender, either online, by phone, or in person, along with relevant financial documents. The
lender assesses the application and determines the borrower's eligibility and the loan terms.
Once approved, the borrower receives the loan funds, usually via direct deposit into their
bank account.
Repayment: Personal loans are repaid over a specified period in fixed monthly instalments.
Borrowers must make timely payments according to the loan agreement to avoid late fees and
negative impacts on their credit score. Some lenders may offer flexible repayment options,
such as bi-weekly or automatic payments, to help borrowers manage their debt more
effectively.
Impact on Credit Score: Successfully repaying a personal loan can positively impact the
borrower's credit score by demonstrating responsible borrowing behaviour and improving
their credit history. Conversely, missing payments or defaulting on a personal loan can
damage the borrower's credit score and make it more difficult to qualify for future loans or
credit products.
Overall, personal loans provide individuals with access to funds to cover various personal
expenses or financial needs. However, borrowers should carefully consider their financial
situation and the terms of the loan before borrowing to ensure they can afford the monthly
payments and avoid unnecessary debt.

Documents required for Personal Loan: -

 Photo 2 Copies
 Pan Card Copy
 Aadhar Card Copy (both side)
 Own House Proof (Latest Electricity Bill / Tax paid Receipt)
 Latest 3month Salary Slip
 Appointment letter
 Latest 6 Months Banking
 Loan tracks from beginning to Till Date.

Car loan:
A car loan, also known as an auto loan or vehicle financing, is a type of loan specifically
used to purchase a vehicle, typically an automobile.
Here are some key concepts related to car loans:
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Purpose: Car loans are designed to provide individuals with the funds necessary to purchase
a vehicle, whether new or used. They enable borrowers to spread out the cost of the vehicle
over time, making it more affordable by paying in Instalments.
Secured Loan: Car loans are typically secured loans, meaning the vehicle itself serves as
collateral for the loan. This reduces the risk for lenders, as they can repossess the vehicle if
the borrower defaults on the loan.
Loan Amount and Term: The loan amount for a car loan depends on factors such as the
purchase price of the vehicle, the borrower's creditworthiness, and any down payment made.
Loan terms typically range from two to seven years, with longer terms resulting in lower
monthly payments but potentially higher overall interest costs.
Interest Rates: Car loan interest rates can be fixed or variable. Fixed-rate loans have a
consistent interest rate throughout the loan term, while variable-rate loans may fluctuate
based on market conditions. The interest rate depends on factors such as the borrower's credit
score, loan term, and economic factors.
Down Payment: Many lenders require a down payment for a car loan, which is an upfront
payment made by the borrower towards the purchase price of the vehicle. A larger down
payment reduces the loan amount and can result in lower monthly payments and interest
costs.
Creditworthiness: Like other types of loans, lenders assess the borrower's creditworthiness
when approving a car loan. This evaluation considers factors such as the borrower's credit
score, credit history, income, employment status, and debt-to-income ratio. Borrowers with
higher credit scores typically qualify for lower interest rates and better loan terms.
Application Process: Applying for a car loan involves submitting an application to a lender,
either through a dealership, bank, credit union, or online lender. The lender evaluates the
application and determines the borrower's eligibility and the loan terms. Once approved, the
borrower can proceed with purchasing the vehicle.
Repayment: Car loans are repaid over the agreed-upon term in fixed monthly instalments.
Borrowers must make timely payments according to the loan agreement to avoid default and
potential repossession of the vehicle. Some lenders may offer flexible repayment options,
such as bi-weekly payments or automatic deductions from a bank account.
Insurance Requirement: Lenders typically require borrowers to maintain comprehensive
and collision insurance coverage on the vehicle for the duration of the loan to protect their
investment.

Car loans provide individuals with a way to purchase a vehicle without having to pay the
entire purchase price upfront. However, borrowers should carefully consider their budget and
financial situation before taking out a car loan to ensure they can afford the monthly
payments and associated costs.

Documents required for Used car Loan: -

 Photo 2 Copies
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 Pan Card Copy

 Aadhar Card Copy (both side)
 Own House Proof (Latest Electricity Bill / Tax paid Receipt)
 Trade License
 Latest two-year ITR’s
 6 Months Banking (CA/OD)
 Loan tracks from beginning to Till Date.
 Vehicle RC/Insurance Copy

Documents required for new car Loan: -

 Photo 2 Copies
 Pan Card Copy
 Aadhar Card Copy (both side)
 Own House Proof (Latest Electricity Bill / Tax paid Receipt)
 Trade License
 Latest two-year ITR’s
 6 Months Banking (CA/OD)
 Loan tracks from beginning to Till Date.
 Quotation
 Driving license

Construction loan:
A construction loan is a specific type of loan designed to finance the construction of a new
residential or commercial property. Unlike a traditional mortgage, which is used to purchase
an already-built property, a construction loan provides funds to cover the costs associated
with constructing a new building. Here are some key concepts related to construction loans:
Purpose: Construction loans are used to finance the construction of new properties, including
single-family homes, multi-family residences, commercial buildings, and even major
renovations or additions to existing structures.
Short-Term Loan: Construction loans are typically short-term loans, often with terms
ranging from six months to two years. During this period, the borrower receives funds in
stages as construction progresses. Once construction is complete, the borrower typically
refinances the construction loan into a traditional mortgage or pays off the loan in full.
Draw Process: Instead of receiving the entire loan amount upfront, borrowers receive funds
in stages or "draws" as construction milestones are met. The lender may inspect the
construction progress before releasing each draw to ensure that the funds are being used
appropriately and that the project is on track.
Interest Payments: During the construction phase, borrowers typically only make interest
payments on the funds that have been drawn, rather than the entire loan amount. This helps to
reduce the financial burden on the borrower during the construction process.
 18

Construction Timeline: Lenders require a detailed construction timeline and plan before
approving a construction loan. This includes plans and specifications for the property, as well
as a schedule of construction milestones. Borrowers must adhere to this timeline to ensure
that the project is completed on schedule.
Loan-to-Value Ratio: Lenders typically require a lower loan-to-value (LTV) ratio for
construction loans compared to traditional mortgages. This means that borrowers may need to
provide a larger down payment upfront to secure financing for the construction project.
Credit and Financial Requirements: Like other types of loans, construction loans require
borrowers to meet certain credit and financial criteria. This includes having a good credit
score, stable income, and sufficient assets to cover the down payment and other associated
costs.
Conversion to Permanent Financing: Once construction is complete, borrowers typically
have the option to convert the construction loan into a permanent mortgage. This involves
refinancing the construction loan into a traditional mortgage with a longer term and fixed or
adjustable interest rate.
Construction loans can be complex and involve a unique set of considerations compared to
traditional mortgages. Borrowers should work closely with lenders and builders to ensure that
they understand the terms and requirements of the loan and that the construction project
proceeds smoothly and according to plan.

Documents required for Construction Loan: -

Applicant:

 Photo-2
 Pan Card
 Adhar Card
 Hospital Registration Certificate
 ITR 3 Year -
 Bank Statement Latest 1 year
 Loan Track if any

Co- applicant:

 Photo-2
 Pan card
 Adhar card
 ITR Latest 3 year
 Loan track if any
 Bank Statement Latest 1 year

Property Documents:
 19

 Sale Deed
 Mother Deed (Previous deed)
 Estimation
 Latest RTC
 Latest Tax paid receipt
 EC from last 15 years
 Building license and approved plan
 Form No. 9/11 or E Katha
 Conversion Order

Mortgage loan:
A mortgage loan, often simply referred to as a mortgage, is a type of loan specifically used
to finance the purchase of real estate, typically residential property such as a home or
condominium. Here are the key concepts related to mortgage loans:
Purpose: The primary purpose of a mortgage loan is to enable individuals to purchase real
estate without having to pay the full purchase price upfront. Instead, borrowers make a down
payment and borrow the remaining amount from a lender, usually a bank or mortgage lender.
Secured Loan: A mortgage loan is a secured loan, meaning the property being purchased
serves as collateral for the loan. If the borrower fails to repay the loan according to the
agreed-upon terms, the lender has the right to foreclose on the property and sell it to recoup
the outstanding debt.
Loan Amount and Down Payment: The loan amount for a mortgage is typically a
percentage of the property's purchase price. Borrowers are required to make a down payment,
which is an initial upfront payment representing a portion of the purchase price. The size of
the down payment can vary, but it's often around 20% of the purchase price. However, there
are programs available that allow for smaller down payments, sometimes as low as 3% to
5%, particularly for first-time homebuyers.
Interest Rates: Mortgage loans come with either fixed or adjustable interest rates. With a
fixed-rate mortgage, the interest rate remains the same for the entire term of the loan,
providing predictable monthly payments. Adjustable-rate mortgages (ARMs) have interest
rates that can fluctuate over time based on market conditions, potentially resulting in changes
to the monthly payment amount.
Loan Term: Mortgage loans have varying term lengths, commonly 15, 20, or 30 years. The
term length determines the duration over which the borrower repays the loan. Longer-term
loans typically have lower monthly payments but result in higher overall interest costs over
the life of the loan.
Amortization: Mortgage loans are typically amortizing loans, meaning that each monthly
payment covers both principal and interest. Initially, a larger portion of the payment goes
towards interest, with the remaining amount applied to reducing the loan balance. Over time,
the proportion of the payment applied to principal increases, gradually paying down the loan
balance.
 20

Creditworthiness: Lenders evaluate the borrower's creditworthiness when approving a

mortgage loan. This assessment considers factors such as the borrower's credit score, credit
history, income, employment status, debt-to-income ratio, and other financial obligations.
Borrowers with higher credit scores and stable incomes are more likely to qualify for lower
interest rates and better loan terms.
Closing Costs: In addition to the down payment and loan amount, borrowers are responsible
for paying closing costs when obtaining a mortgage. These costs include fees for loan
origination, appraisal, title insurance, attorney fees, and other expenses associated with the
mortgage transaction. Closing costs typically range from 2% to 5% of the purchase price and
can vary depending on factors such as the lender and location.
Overall, a mortgage loan is a significant financial commitment that allows individuals to
purchase real estate by spreading out the cost over time. Borrowers should carefully consider
their financial situation and compare loan options to find the mortgage that best suits their
needs and budget.

Documents required for Mortgage Loan: -

 Photo 4 copies (Applicant & co-Applicant)
 Clear copy of Pan Card
 Clear copy of Aadhar Card both side
 Business License
 Banking statement for latest one year to till date
 Loan statement from the beginning to till date
 OD sanction letter and statement
 Co-applicant's clear copy of pan card, Adhar card and bank statement for latest
o to till date
 Co-applicants Income statement (salary slip/Latest 3year ITR)
 GST Certificate, GST returns from April 2023to till month
 VAT registration
 Latest 3 Year ITR

Property Documents
One set of legal documents as per earlier legal report

 Sale Deed
 Mother deed
 EC for 15 years
 Latest tax paid receipt
 Conversion order
 Form 9,11 or E Katha
 Latest RTC
 Building license and approved plan
 Conversion Order with Sketch

Doctors loan:
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A doctor's loan, also known as a physician mortgage loan, is a specialized type of mortgage
designed specifically for medical professionals, including doctors, dentists, and veterinarians.
These loans offer unique features tailored to the financial circumstances of medical
professionals who may have significant student loan debt but high earning potential. Here are
some key concepts related to doctor's loans:
Purpose: Doctor's loans are intended to help medical professionals, who often have high
student loan debt and delayed earning potential due to lengthy education and training, to
purchase homes. These loans recognize the unique financial profile of doctors and offer more
favourable terms compared to traditional mortgages.
Eligibility: Doctor's loans are typically available to licensed medical professionals, including
physicians, dentists, veterinarians, and sometimes other healthcare professionals such as
pharmacists. Eligibility criteria may vary depending on the lender, but borrowers generally
need to provide proof of their professional status and income.
Down Payment: One of the key features of doctor's loans is the option for low or no down
payment. While conventional mortgages often require a down payment of 20% or more to
avoid private mortgage insurance (PMI), doctor's loans may allow borrowers to finance up to
100% of the home's purchase price without PMI. This can be particularly beneficial for
medical professionals who may have limited savings due to student loan debt.
Income Verification: Doctor's loans may offer more flexible income verification
requirements compared to traditional mortgages. Lenders may consider the borrower's future
earning potential based on their profession rather than solely relying on current income. This
can be advantageous for medical professionals who are still in residency or fellowship
programs or have recently completed their training.
Student Loan Debt Consideration: Lenders offering doctor's loans may take a more lenient
approach to debt-to-income (DTI) ratios, recognizing that medical professionals often have
significant student loan debt. Some lenders may exclude student loan payments from the DTI
calculation altogether or use a more favourable formula to assess the borrower's ability to
repay the mortgage.
Interest Rates and Terms: Doctor's loans typically offer competitive interest rates and terms
comparable to or better than conventional mortgages. Borrowers may choose from fixed-rate
or adjustable-rate mortgage (ARM) options with various term lengths to suit their preferences
and financial goals.
Additional Features: Depending on the lender, doctor's loans may come with additional
benefits such as flexible underwriting criteria, streamlined application processes, and
dedicated support for medical professionals. Some lenders may also offer specialized
financial planning services tailored to the unique needs of medical professionals.
Overall, doctor's loans are designed to provide medical professionals with easier access to
homeownership by accommodating their specific financial circumstances. However, it's
essential for borrowers to compare loan options from different lenders and carefully consider
the terms and conditions of each loan to find the best fit for their needs

Documents Required for Doctors loan (Salaried)

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 Photo
 Pan Card
 Aadhaar Card
 Own house proof (Tax paid Receipt/ Electricity bill)
 Qualification proof
 Appointment letter
 Latest 3month salary slip
 FORM 16 (latest 2 years)
 Latest Salary Credited 6month bank statement
 Loan Track (If any)
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ANALYSIS

Difference between housing and mortgage loan

Basis Housing loan Mortgage Loan
Purpose To buy construct a new house For business purposes or for
or renovation for personal use

Interest rate Starts from 8.5% Starts from 9%

Margin Up to 90% of the property Up to 60% of the property

value value

Tenure Up to 30years Up to 15years

Processing fee Up to 0.5% of loan amount Up to 1% of loan amount

+applicable taxes +applicable taxes

Type of loan secured Secured

Interpretation: Housing loan is secured taken in order to build or to renovate a house. The
interest starts from 7%. Were as mortgage loan is secured loan where we pledge asset as a
collateral, and is taken personal use or for business purposes. The Interests
rates starts from 8%.
 24

Difference between Personal and Business loan

Basis Personal loan Business Loan
Purpose For personal use For the expansion of
business

Interest rate Starts from 10.75% Starts from 15%

Credit score Above 700 Above 700

Tenure Up to 5years Up to 3 years

Processing fee Up to 1.5% of loan amount Up to 2% of loan amount

+applicable taxes +applicable taxes

Type of loan unsecured Secured

Income Required Salary Above 15000 ITR Annual income should

be more than Rs.1.5 Lakh
p.a.

Payment charges 3% on the prepaid amount 3% on the prepaid amount

Interpretation: personal loan is the loan which is given for salaried person for his personal
use. It's an unsecured loan, we don't need to pledge any kind of assets. The interest rate starts
from 10%. Business loan is taken for expansion of the business. It is a secured loan; the
interest rate starts from 11%
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Suggestions:
 When loan is provided to a person or business organization the marketing department
staff should visit them personally and see their current status that they are capable to
repay the amount
 As many of them doesn't know about these financial institutions so they have to make
a marketing team for this and sent them to rural area then should explain all the
services which are available
 The financial institution should use online banking facility so that customers feel very
easy to pay their amount
 If the financial institution reduces their personal loan interest from 10% to 9% it will
attract more customers.
 The staff should attend the workshop and training program to know more about new
type of aspects.
 The institution should go for marketing strategy like advertisement in newspaper, put
flex and banners at different places and creating awareness through various social
medias.

Conclusion
SMS Finance Udupi stands out as a reliable and trustworthy financial institution, committed
to delivering excellence in service and value to its customers. With a strong foundation built
on integrity, expertise, and customer-centricity, SMS Finance Udupi is poised to continue its
growth and make a positive impact in the financial sector.